What’s Not to Love About a New Car?

This is a guest post from Katrina Ramser, a freelance writer who contributes new-car reviews for various websites, newspapers and magazines. She also writes about swimming at SquidKid.

I love new cars. From the luxury mid-size utilities to the efficient little guys, all have that new car smell — clean, pure, new.

I can get wrapped up and taken away with an SUV’s strength and sleekness in the snowy mountains of Tahoe, or just bullying into a Whole Food’s parking space. And I seem to develop a more practical and sustainable look on life after peaceful time spent on long drives with a Toyota Prius, or the overlooked (but so charismatic once you get to know it!) Hyundai Azera.

And the vehicles just keep changing and improving with each passing year, hoping to catch my eye and dazzle me once more with their ability to stay young forever. What’s not to love about a new car?

Always the bridesmaid, never the bride
I can write poetry about each and every model and maker I’ve had the pleasure to have known. I am an auto journalist.

It’s my job to date and judge vehicles. I do have preferences, like a man might for a tall blonde, or how females fall under the spell cast by bedroom eyes. For example, if a car doesn’t have power seats, we’re off on the wrong foot. And when I meet a vehicle that has four-wheel drive capability, better than average gas mileage, and a clean and reliable past, I am swayed. I always remain objective, but I’m guilty of enjoying each and all of the vehicles I drive. I ask you again, what’s not to love about a new car?

But it’s just my job to date, never to marry. It’s a personal decision I made a long time ago to always be the bridesmaid, but never the buyer. I’ve never taken the new car plunge. Ever.

I’m wary of the price you must pay for such glorifying newness. When I was younger, I could not afford a new car. Now that I’m older and wiser, it’s more like I will not afford a new car. I’ve seen what they do to you, and I know some types of love are not worth the headache and entrapment, no matter the pressing desire.

Financial breakdown
Last year, I did my boyfriend’s bookkeeping, which included tracking and calculating the costs of the 2005 Dodge Ram 1500 that he bought brand new. Almost three years into Shane’s ownership contract, I discovered he spends an average of $1,000 a month on the vehicle.

The average monthly car payment is $475. Shane’s is $440 plus some change. He was required to buy full coverage, so insurance runs about $189 a month. He has an extended warranty of around $120. Gas in a full-size truck with his engine size costs roughly $190 for 20-mile there-and-back commuting. Registration evens out to $31 a month; car repairs, dealer tune-ups and washes come in at $49; and car accessories averaged $115 a month last year, as he bought a spray-bed liner and lumber rack because it’s a work truck. That’s around $1,000 per month, or $12,000 a year to own his new car.

He signed a 72-month (6-year) contract with the Dodge financial house, sentencing him to an interest rate I don’t much care for: 10.39% (the national average is 7.13% as of this writing). His credit was okay when he was financed for $23,416 — a nice down payment of $7,000 helped reduce that number. But he’ll pay an additional $8,285 in finance charges. That’s enough for a second car — maybe even two! But it’s all so typical in our society.

Coping with costs
With rumors of a recession in the wind, we’ve tightened the fan belt and made some adjustments. The car accessories budget should be much smaller this year since he doesn’t need another bed liner or rack. Shane’s now working in the same town where we live, so gas costs should also be smaller. And he washes the Dodge himself now, though he grumbles that it takes a good hour or so. We also realized (if not too late) an extended warranty is nothing but a pricy piece-of-mind gamble. As for reducing the interest rate by refinancing, we’re going to instead make a radical move to double the car payment and get the thing (and ourselves) debt-free.

Despite changes, we’re still looking at a lot of money to maintain the cost of living with the new car. We’ll call the whole thing a life lesson. It’s a lesson many never learn, never realizing a car payment is an option, not a rite of passage.

A new cars loses 25 percent of its value the instant you drive it off the lot. In four years, depreciation consumes most of its original value. The initial excitement dies, boredom sets in, and we’re open to temptation again. Usually after about five to six years we start looking around for a replacement.

Young beauties are to be had everywhere! They pass by you on the street, catch your eye walking into the grocery store, and flirt with you at stop signals. I’m talking about new cars, of course. Vehicles today are more insanely capable with each passing year, from the safety to the technology front. In some cases, they even drive themselves!. Cars are only going to get better. They are only going to stay younger.

Old faithful
We have created a society that doesn’t value old things. With each passing year, our love dies a little more for what we once claimed to esteem. Yet I remain faithful to what I drive. I can’t admire it in the same light I have for new cars, but I can love it for different reasons.

I have a hand-me-down 1995 Chrysler Cirrus, an after-thought gift from my upgrading parents. It’s a car the manufacturer never bothered to make again. There are serious issues with the engine that cannot be found to fix, despite whichever diagnostics machine I’ve hooked it up to (so much for some car technology). It still drives fine, but sometimes it stalls at stoplights. It costs me under $400 a year to insure. It is totally payment-free. It doesn’t guzzle gas. Maintenance has been reduced to tossing broken car pieces like antennas and paneling into the trunk. And with the type of job I have, I don’t even drive it too much.

In a sense, I have to keep writing about automobiles in order to be able to afford to drive at all. With the cost of gas reaching an all-time high, I must focus on landing more automotive-related jobs just for personal finance reasons. Sounds sort of sadistic to bank on what’s depleting, but I need to drive like the rest of the world, and I kind of think I’ve found a clever way to do it.

I don’t have to buy the merchandise to appreciate or even to recommend new cars. There is no denying what they are. But sampling fills me enough, thanks. After awhile, they just become another pretty face. Because what’s not to love about a new car?

I agree that cars come with expenses (both new and old) many of the expenses that she sited for her boyfriend’s truck were either a reality of driving or a symptom of his own vanity (the car accessories for example).

I subscribe to the line of thinking in the book ‘Debt is Slavery’ by micheal mahalik; buy a new car and drive it until the wheels fall off.

Yes, there is depreciation, but who cares? I’m driving it into the ground, not for resale. And since I’m the original owner, I know it’s maintenance history and the guy that put every mile on it.

I’m 38 years old and have only owned 3 cars in my life, all new and very little maintenance. :-)

I guess I fall somewhere in between. New cars are EXPENSIVE! However, I would never drive a 12 year old car, both for safety reasons and because, well, it just wouldn’t be much fun. But I do subscribe to the line of thought that you can save a TON of money buying a slightly-used car with under 20K miles on it. I bought mine from a dealer and had a complete service record to look at. I also still had over 30K left on the warranty, which was very reassuring.

I agree that owning a new car is typically not a smart thing to do. However, doesn’t writing new car reviews and talking about how great they are only encourage people to buy new cars and get themselves in more financial trouble. I can’t imagine Katrina includes the personal finance advice she espouses here in her auto reviews. I am impressed, though, with her ability to avoid the new car temptation in her own life.

After a long run of bad luck with used cars in my 20s, I decided to buy new despite all the good arguments against it. I guess I like knowing how my car was driven and what was done to it; I’m a careful driver and do all the scheduled maintainance, read the manual, etc., and know that most people don’t do those things. Plus I hate the smell of cigarette smoke and I find that even if the original owner never smoked they may have allowed a passenger to do so a few times, and it’s impossible to get that stink out of the car. So I buy new and keep the car for a minimum of 10 years assuming the car lasts that long (which most good cars today will with no problem).

I bought a new Toyota Tacoma in 2002, when I was 22. Being a very frugal person, but having zero personal finance savvy, I saved up and bought it straight out.

Now that I know a thing or two about IRAs and compound interest, I realize what else I could have done with $18k at that point of my life. I could easily have a downpayment on a house by now, if I’d invested it.

But I don’t regret it. I love my truck. It has never required anything beyond very basic maintenance (oil changes, new air filters, tire rotations). I grew up driving old cars that broke down constantly. I didn’t have the expertise to judge whether a mechanic was ripping me off or not. I would constantly be worrying that I was going to break down by the side of the road. I got a lot of use out of my AAA card. It takes a toll.

This issue may be cut and dry in purely financial terms, but in terms of time and convenience, there’s a big gray area, especially for those of us who aren’t car experts.

I’ve bought both new and used, and now am firmly on the side of buying certified used cars. Honda, for example, has a great program that I’ve been very happy with, but other manufacturers do the same thing. One nice side effect of buying used is that you avoid the “pure” new car smell, which is actually produced by airborne toxins that new car materials release.

This post doesn’t impress me much. There’s nothing wrong with buying a new vehicle. There is, however, a lot wrong with making a bad purchasing decision as described in the article. Those are two very different things. And a 10% interest rate: Yikes! You should never settle for a rate like that unless your credit is bad and you have no choice.

If you buy a new car, the right one for your budget and lifestyle, and then drive it until you wear it out, you’ll be fine. In fact, this may be a better way than buying used. I certainly believe it is. I’m practicing this now, and I ran my previous new vehicle into the ground before replacing.

A new vehicle doesn’t need many repairs and if you maintain it properly, it shouldn’t need as many over time. I have friends with great used car deals whose cars need a lot of work because they weren’t properly maintained early on.

The worst thing a lot of people do is to trade up before a car is paid for. If your car seems old, take it to get a detailed cleaning, maybe a new paint job, some new tires, etc. Make it look better and feel new, then think about the money you’re saving by sticking with an old friend.

I have driven only used cars for the past 4 years. Three infact. My first was a Honda 1992 that I had sold to a friend due to moving to another state. It still runs to this day. My second was a 1997 Saturn that was involved in an accident (my friend drove it) and I wrote it off. He reimbursed me for the car. My third now is a Chevy Lumina 1997. All my cars had been less that 2000, and I never had problems with them. It had also reduced my insurance greatly as I had never been personally involved in an accident and all my cars were cheap, but looks good on the outside. I did not have any major problems with them other than an occasional expense. I buy my cars from individuals, using Craiglist or advertisements. I avoid dealers. I donâ€™t rush when I buy a car, for rushing makes me buy wrong stuff.

I had been tempted to buy a new car many many times for I can afford it. But all the things you said in your article are what always run in my mind. As tempted as I get, as much as I salivate over the new exciting models, I could never get oneâ€¦moreover on a monthly payment. It is a debt I donâ€™t want to get into.

Whenever I start feeling like I should go look at new cars, I get the cars I have professionally detailed. What a difference that makes! It’s like having a new car. I had a car that I was selling detailed and almost changed my mind on the sale!

Detailing isn’t cheap, but it’s a lot cheaper than one single car payment.

What’s with the men preferring tall blondes and women falling for bedroom eyes stuff?

And are we to take advice from someone who dates a $1000/month truck guy? And now they are going to double their payment?

Perhaps the best financial advice would be to get rid of that over-accessorized beast for something a bit more cost-efficient and practical. If he needs a truck fine — there are cheaper one’s out there.

And there is a difference between buying a new $40k truck and a new $17k Civic.

I think we’ve had much better car-buying discussions in the past here.

The worst possible time for me to read such a post. I’m 21 and only a few months away from graduating. I have driven my ’91 Volvo to 230,000 miles and its still running. But I have a cross country move coming up for my first job, and its time the Volvo and I parted ways. I am seriously considering getting a new car and just driving it for many many years. I have a decent bit saved up and could pay the car off in less than 3 years.

Cars is a point where frugality and hobby meet and fight for me.

I feel like, just this once, I’m going to take the plunge and get something actually new. Is that really such a bad thing?

I am 21 now, and got my first car when I was 16. My dad found a really good deal on a 1994 Honda Accord. We paid cash for it and I have been driving that same car for almost 6 yrs now. It’s required almost zero moolah in maintenance. When I think about it, cars are not an investment, but just a necessity (for most folks) in everyday life. It is sad to think about the amount of importance people place on owning a new car. Sure I think its perfectly fine to own a brand new car if you can afford it, and not be emotionally attached to it.

In my experience thus far, I think I will keep driving this ole Honda until it croaks, then get another cheap used car!

It’s been a while since I shared my ongoing struggle against purchasing a Mini Cooper. Maybe if I do it in the comments, it won’t count as mentioning it on the blog. :)

As your recall, I’ve made a vow that I will not buy a Mini Cooper until I’ve built my emergency fund. (My target is $10,000, growing to $20,000.) I’m saving money very well right now — I’ve kept my spending in check — and should hit $10,000 sometime mid-year. (It’s hard to know exactly when because my tax picture for 2007 and 2008 is still murky.) So meeting that promise to myself isn’t going to be a problem.

Other things *will* be a problem, though. For example, am I willing to purchase a car now without paying cash? That’d be another $25,000 I’d have to save! And would I really want to buy a new car? As Katrina’s post argues, there are a lot of expenses involved. (Though I’m one who is generally willing to go new anyhow.) But more to the point: what would I do with a new car? Since I started working from home, my driving has plummeted. I average maybe 10 miles a day instead of 50 miles a day. That’s a huge difference. Is it really worth paying tens of thousands of dollars for a vehicle I will barely use? I almost think I’d be better off paying for a fancy bicycle instead.

Anyhow, I still covet a Mini Cooper, but there’s little chance that I’ll act on my desires any time soon. I’ll confess that I was drawn to a used yellow Mini the other day. On Sunday, Kris and I were driving around and I saw it in a used car lot. On Monday I happened to drive past the lot again, and I was going to stop to take a look at it. Fortunately, it was gone.

I’ll tell you what I don’t like about new cars… In Aug of 05 I had to put down my 89 Stanza and I took some saved cash (cause I hadn’t made a car payment since 1994) and bought a nice used Acura. Its a very nice car and is aging well.

Last May my husband’s 10 year old Civic was totaled. He needed another car and wanted a manual transmission – I wanted something a little more family oriented than another small coupe for him. Used manual’s are hard to find in a sedan. So we ended up buying a new Camry.

I don’t regret the purchase as he’ll drive the car for 10 yrs or more and we did pay cash. But it still chaps my hide that I have a used Acura that is still nicer than the new Camry AND it costs $7k less. I’ll likely drive my used car for 10 yrs, too, cause its holding up very well. I just can’t justify a decent new car when I can get a very nice used luxury car for less. I can always buy a container of that new car scented air freshner.

Detailing is having your car professionally deep cleaned I believe. It really is an awesome way to make you feel good about your car again.

I had a new car when I was 16. It was just my mother and I, and she wanted to know that I had something new, reliable, and that was under warranty so she didn’t have to deal with repairs or anything. I don’t know that she got the concept of pre-owned, and what did I care? I had a new car! Which I totalled…and then got another new car. We were not rich by any means…middle class, barely I would say at that time. But between my mother and I, and my dad’s support, we made it work and it was great.

I’ve been driving my current car since 2004? Seems like a long time now. I plan to drive it for a long time. It only has 65K on it now, I like it, and it works for me.

To each their own though. If you can afford a new car, and to save for retirement, etc…then go for it. I know that this site talks a lot about frugality, but I would say that sometimes its ok to splurge within reason. Your car, your clothes, etc. in the business world (unfortunately) represent who you are and where you are going. Just my opinion, and the unfortunate reality that I have experienced.

JD – Detailing is having your car professionally cleaned and “shined”. Usually they remove the seats, clean everything, shampoo the floormats and carpet, then apply Armour All over the dash and other vinyl/rubber parts. They’ll wash and wax the outside and put the shiny stuff on your tires. Its sort of like a makeover for your car. It can run anywhere from $50-$100 bucks in my part of the country.

Personally I just hand wash my car regularly (depending on the weather) more than once a month. I clean the windows and vacuum if needed. I also dust the dash and other accessories with a swiffer, especially in a dark interior car. Then I finish off with the tire shine on the tires (the rubber part, not the rims or hubcaps!). Nothing makes the outside of a car look good like shiny tires. You can even make that Focus of yours look good with some tire shine!

But if you keep your car clean regularily it is much easier to maintain a good apperance. My husband lets his car go for months and it is very hard to get clean again.

I agree with many of the above comments–this purchase was a particularly bad deal. If you want a brand new car, you’re paying a premium for the luxury of having that car, which is your decision. There’s nothing wrong with making this decision, if you can afford it. Buying at 10% APR means he hadn’t earned that new car yet. And what’s with all the extras?

The > 10% interest rate boyfriend is paying on his truck is ridiculous; his credit must be shot. There’s no reason to pay more than 6-7% for a vehicle. A couple where one drives s paid-for 13 year old vehicle and one drives a 10% loan is destined for financial fights.

I spent $150 for detailing (wash, vacuum, seats/carpet shampooed, hand wax, glaze on dash, glaze on tires). It really depends on where you go. My car was fairly clean though. My father usually gets his car done once a year for $100 which I think is cheap considering how dirty his car gets.

It is shameful how much we spend on automobiles in this country. I drive a 1991 work van with no radio and no air conditioning. It gets me back and forth to work, and sits in my driveway most of the weekend.

My wife drives a 2000 Chevy Tahoe that we purchased five years old, private sale. That will be the last vehicle I have to finance, and we will have it paid off within a year.

One can become incredibly wealthy by throwing $475 worth of would-be car payments into mutual funds every month over the course of a driving lifetime.

Don’t buy anything you see on a rental car lot. Rental companies keep cars for about 3 years and then sell them before they go off warranty. They sell thousands of cars a year and flood the “pre-owned” market, driving the value of certain models down. European cars tend to hold their value better because Avis and the like prefer the cheaper domestic and Asian cars.

I use the Ramsey method to buy a car. I do buy new cars, because I know how they’ve been maintained, but I tend to run them till they’re scrap. And then I sell the scrap. Every month a little bit of money goes into a high yield savings account, and that account pays for vacations, a new car, or other long-term purchases. Since I bought my new Rav last year, I dont plan on buying another car until…maybe 12 years down the road. Therefore, I don’t feel like I am losing out by not getting the slightly used discount.

My wife and I also don’t drive alot, so that might be a reason why we’re not concerned…

I liked the post as well. It was timely for us and I found the comments interesting. My husband and I are 39 and have never had a new car. First because we could’t afford it (our first car we bought used as college sophomores)and then because we always thought it was a bad deal because of depreciation and interest. Our last car, a minivan, we drove until it fell apart at 186,000 miles. Now I have a new used one and my husband drives a 1994 Saturn. The odometer broke at 148,000, but we only paid 3800 for it 6 years ago. No problems with it at all. But we really think that it’s going to see the end of days soon. No sign of it, but when it fails, it’ll fail big.

So not having a car payment now, we’re wondering what to do. I admit, I’m a little surprised that the general feeling seems to be okay to new so long as it’s not outrageous interest or such.

I drive a 1994 Dodge Caravan that I acquired in 2006 and it’s still going fairly strong with only one real repair needed in that time.

I’d never buy new, for me a car is a car is a car and I’ve never met one yet that excited me. I’d much rather take transit or walk than drive so they are a burden more than anything and I only take it out 2 or 3 times a week for groceries and a weekly trip to the ‘burbs to visit family and friends.

My 2000 economy car (do they even make “economy cars” anymore?) has over 180,000 miles on it and still gets around 26/36 mpg. That’s nearly as good as a brand new Civic Hybrid, and it didn’t cost nearly as much.

People drool over hybrids, completely oblivious to the fact that we used to expect such standards from conventional engines.

My husband and I have bought new cars–a Honda Accord we kept for 14 years, only had 125K miles on it and got an excellent trade in for our Odyssey van a couple of years ago. Our other car is a 10 year old Accord we will drive into the ground. We have loved our Hondas for their extreme reliability–we’ve had next to nothing to fix on either Accord. My husband takes meticulous care of our cars and since we keep them for a long time we are very happy with our decision to buy new.

K, while I agree with your statement that conventional engines can get great mileage, I’d hardly say 26/36 mpg is “nearly as good.” While I can only offer anecdotal evidence, my friends that own or used to own hybrids got significantly better mileage. One recently bought a used Civic Hybrid for $10k, and regularly gets 50+ mpg.

Regarding the original post, if your new car is depreciating 25% when you drive it off the lot, financially I’d say you made the wrong choice, and should have bought a lightly used model. If you do your research, you’ll see that several makes/models hold their value very well for the first few years – look at resale on Scion (xB in particular), Mini, Acura, Lexus. These almost don’t make sense to buy used and less than a couple years old, as they often still sell for near retail.

I’ve only had two cars so far but both times, I bought the car new with cash. The first one, I drove it until the whole front end was just about to fall off. The second one is still going. I don’t think it’s so bad if you save up for the car. The loan is what costs a lot.

* decide you won’t buy one until you can pay cash (comfortably!)
* give yourself permission to buy the fancy bike
* while you’re saving up, pick a special occasion – your anniversary, your birthday – and rent a Mini for the weekend. See if the fact that you can enjoy one for a few days – for a fraction of the cost – satisfies your craving.

And note to Ryan: as others have said, there’s nothing wrong with buying a car new if you plan to drive it for years and years. It’s definitely better if you can avoid interest charges, though. Is there any chance you can get a cheaper new car that would still make you happy and last a long time?

I’m in the exact same shoes as you (only up until this point, being in college I’ve gotten by on a bike and by foot). I’m moving 2,000 miles away for my first job as well (from the cornfields of IL to the everything of WA). I took the plunge in February and bought a new car. Just over 20K and like you, I will have it paid off in 3 years. I think this will end up a good decision for 3 reasons:
1) I got 1.9% APR financing through Mazda. Therefore I will only pay a little over $500 in interest over the life of the loan.
2) I’m not a car savy individual. I hope to become more proficient at minor repairs and maintenance, but I don’t want a car that could end up with many problems in the first year that I don’t know how to deal with and have to shell out lots of cash for a repair shop to do.
3) I’m loving the car.

I think that as long as you are willing to commit to owning the car for the long term, purchasing new is not a bad decision. It may not be the most frugal decision but I feel that it is worth the piece of mind you get (or at least should get) with a new car.

Best of luck to you and I both as we move forward onto the next phases of our lives.

re Commonsense…Great minds think alike. My spouse and I are currently buying a house within walking/biking distance of his workplace, the kids’ schools, shopping & a light rail station. We currently own two paid-off cars, but soon we’ll be a one-car family. Our friends and family think we’re nuts, but I’m positive we’ll be just fine.

I’ve never actually owned a new car. I tend to plan my living arrangements so I may either 1) Walk to work, 2) Bike to work, 3) Bus to work. I find my wealth grew in leaps and bounds when I ditched my car. My savings increased and my fitness also increased. Ohh, I also lost some weight which was a super nice bonus to being car-free.

I’ve had both new and used vehicles and prefer to buy new. I say vehicles rather than cars because I’m a motorcyclist. Although when the bikes I buy run around $20k, the difference between them and a car, finance-wise, is small. I do tend to keep vehicles until I run them into the ground however. My current bike, a 2000 model, is at just under 100k miles.

However, I also currently have an 89 Volvo that mostly sits in my driveway. Why don’t I get rid of it? Well, it’s paid for and the insurance and registration for it is a pittance. It is hardly worth anything – I doubt I could get $2k for it. The paint is shot from sitting in the sun for too many years and the interior is worn, reflecting it’s almost 150k miles. However the engine is still in great shape, there are no major problems with the body or frame and it gets good (not great) mileage. I primarily use it when I go to the beach to SCUBA dive. No one is interested in ripping of the 20 year old radio, and certainly no one is looking to steal a ratty-looking 20 year old Volvo. I can be assured after coming back from an hour underwater that my car will still be there and unmolested. Given the low cost of keeping it, I can’t figure out why I’d ever get rid of it.

I’ve also got a paid-off, pampered 83 classic in the garage that I will probably never get rid of either. I’m the 3rd owner, and while I can’t vouch for the maintenence given by the other owners, I know just how well it has been taken care of in the 8 years I’ve owned it. Incidentally, while a new car loses value as soon as you drive it off the lot, at the other end, cars stop dropping in value and may even increase, as is the case with this one. It probably won’t recover the cost of maintenance I’ve put into it, but it is currently worth about $10k more than my purchase price. That sure helps dilute the cost of oil changes and tune-ups!

Good post! However, while I have never owned a new car myself, I would prefer to go with something smaller and a much smaller cost to go with it. My current car costs me under $60 to fill completely, which I am very, very happy with. Small cars, even new, can end up being relatively cheap!

I have bought new, and I have bought used. Every time I have bought new, the car has worked flawlessly for me as long as I have had it:
– 1994 Saturn: 128k miles over 9.5 years
– 2001 Civic: unknown mileage over 2 years
– 2003 Jetta: 63k miles over 5.25 years (and counting)
– 2006 Jetta: 40k miles over 1.75 years (and counting)

Every time I have bought used, the car has had major problems:
– 1988 Jeep Cherokee (massive oil leaks, and other issues)
– 1989 Jeep Wrangler (various issues, too long to list)
– 1999 Ford Taurus (transmission died, among other issues)

I now have 2 VW Jettas that I purchased new (a 2003 1.8T and a 2006 TDI), and I plan on keeping them as long as they fit my needs. The 2003 1.8T will be sold when the TDI no longer fits my family’s transportation needs (such as when we have a 2nd child), and I plan on keeping the 2006 TDI until I retire (basically, for 30+ years).

After this, I’m not sure what I’m going to do. I don’t want to ever take out another car loan, but I also have had nothing but bad luck with used cars. I have considered buying from Carmax or buying a certified pre-owned car, but I’m still nervous about both of those options.

I maintain my cars like a freak, and I have an awesome relationship with the local VW dealership. I’m sure these cars will need unscheduled work (that’s a nice way of saying “I’m sure they’ll have problems”) but so far they are both flawless. I know that most people don’t maintain a car like I do, and that’s why buying used scares me.

—

This is one of the best guest posts I’ve seen in a long time. Thanks for posting it, JD. To answer the rhetorical question: I love everything about a new car… except the payment.

I decided to finance a new vehicle after the one I was driving was unsafe ( I had just recently purchased – used of course ) so after replacing the transmission among lots of other things I told myself never again !!! When I traded that vehicle in for a brand new one I drove off the lot feeling good…. not just because it only had 25 miles, yet I felt is was safe to drive my child around in, and I knew for certain it had never rebuilt!! Also I had a warrenty for 3yrs. or 36,000 miles.

I have traditionally bought used cars – usually about 2 years old – and then driven them until they were literally falling apart under me. The one exception to that is the car I have now. I bought it brand new in 2004 but put a huge down payment on it and paid off the 3 year loan in a year and a half. I plan to drive it also until it falls apart underneath me (ATLEAST 10 years). The reason that I bought this particular car new is because I drive cars for such a long time I wanted to make sure that I got exactly the car I wanted/needed. I particularly wanted a station wagon and the options are quite limited in that catagory. After a considerable amount of searching and research, I decided that going the new route was the best option to get the car I wanted. On the other hand, when we need to replace my husbands car, it was considerably easier to find a car that fit exactly what he wanted on the used market so we did not even consider a new car. In both cases, we are very happy with the purchases and plan to drive them until the wheels fall off.

I agree that usually the used car is the better deal but would temper that by saying that a new car is not always a bad deal. It depends on a lot of things including (but not limited to) how long you are going to keep the car, what price you are able to negotiate and how long you have to make payments.

I quess different things work out for different people, but the real issue here is that a car is not a “investment” it is the one large ticket item that you will buy that will go down in value. However you do need to get to work and find a balance. So you have to look at what the “value” is to get yourself to work ect.. If your happy with owning a car many, years maybe buying new spread out over many years could be a good value, otherwise I like to buy older good used cars from private parties, I would have to say most people would not want to sell a used car that had big problems for fear of someone coming back to them so they trade the “problem” in for a new car.

This is why I stay away from the dealers since I think a private party tends to trade in problematic cars.

I also look at what repair and maintenance costs run BEFORE purchasing that car, some of the maintenance suprises I have had in the past does not make the car a good deal under any circumstances!!
I have to say that I have had good luck with my used cars, my current car a 1994 eagle vision, now with 307,000 miles on it no major repairs and still going! (Bought with 105,000)Someday in the future may buy a new car, but for a few more years I will be looking at a good used one owner car.

In my family we always buy used and were taught to pay cash. My first car was a 1981 Toyota Corolla that I drove until it had 334,000 miles on it and then sold for 400 bucks. It was a great car, even if I had to sometimes start it rolling downhill to start it by the end.
Then I bought a 1995 Camry for 2k from our mechanic. I drove that for two years until it got totaled in a freeway pile up (and my shoulder has never been the same, same).
My current car which I’ve had for 5 years now is a 1994 Subaru Legacy. I got it for 2,900, paid cash. It hasn’t had a single problem in 5 years. I figure it will last me at least another 5-8 years. At which point I’ll spend another 2-4k on something else reliable and comfortable.

Maybe I’m missing something, but the idea of having a car payment seems crazy to me. Leases seem even crazier. I prefer to own my car so that it counts as an asset, and I get the security of knowing that if something goes wrong like a job loss, I don’t have to choose between having transportation and having a roof over my head. (Some of the people I know have car payments that equal my share of rent!).

Part of me wants a hybrid, but I can think of so many things I would rather spend 20k on that it doesn’t even get past a vague fantasy (If I won 200mil in the lottery though, I’m sure I could talk myself into it…)

i, for one, am a self admitted car NUT. once i have been working for a couple years, i’m buying a sports car that i can exclusively take out to the track and rip out some miles at highly illegal road speeds. frugal? nooo way. exactly what i want? YES.

between my husband and myself, we have owned nearly 20 cars (and we’re both under 30.) only one was new, and it was paid off in under 3 years with pretty low cost of financing. a couple of the used ones have been total bombs that left us with a seized engine and a loan balance, some have been “we got bored with it so we sold it” and some were just uber-cheap fixer-uppers that we sold after sticking some work into them. (see post #43 by sal, that’s what we do.)

i won’t get into my personal prejudices about used cars, but we’ve found certain models to be worth the money and others blatantly NOT. just as some new cars are worth the money and others not. it’s all a matter of perspective- we all value different things.

Really, I think the new/old thing depends a lot on circumstances and the car you want to buy.

When I bought my 2004 Civic, I had an older car to trade-in, a decent down payment, and, I got a 2.9% interest rate on the loan. For all that, I got a reliable car that gets great gas mileage. I could not have gotten a used car that was that fuel efficient, unless I’d happened across an Insight. However, the Insights were so light, they would have felt unsafe for the frequent highway driving that I do.

Before buying a car, look at what you really *need* and what you can really afford. An unreliable beater isn’t a deal if you have to worry about losing your job if you miss work one more time…

This article couldn’t have come at a better time. I am about 1 month away from paying off the family vehicle, and I also have a 2001 VW Jetta TDI that has been paid off for about 3 years. I’m contemplating replacing the Jetta with a new(er) vehicle. You see… I just LOVE cars. I’ve had BMW convertibles, etc. and I truly am a car fanatic. However, I have also been working on building up my finances, and once this last car payment goes through, the only debt I’m in is my house. I have no credit card debt other than stuff for my company – which gets paid off monthly…

Not buying the car I want – RIGHT NOW – is a difficult thing to do! Articles like this are good support though…

I am so glad my husband is not a car person, it has saved us alot of money. The total of our vehicles: he inherited a 1985 Ford F 150. It was really useful, but it needed alot of maintenance. That one was wrecked in an accident. The cost to repair was the resale cost, so we traded it in exchange for some trees we needed cut down on our property. We saved for 6 months without having a car until we bought a 1989 toyota camry wagon for 3600. My favorite car! That car was great, hummed like a top, minimal maintenance until we lent it to a friend who left the oil cap off during a long trip. After that it would have intermittent unresolved problems. Without that hiccup I believe we could have had this vehicle for a long long time. So we sold it to the repair shop for $600. Finally we did the “nused” deal, in 2006 $15k for a 2001 certified preowned Honda Odyssey from a dealership. We probably could have negotiated a better deal, but I am a buying novice and wanted that model. We put 4k down, had a 2.9% interest loan from Honda, and it will be paid off in full next month! Although it is used it feels like a new car to me because it is the nicest car I have ever had.

I hate cars and I hate driving and I never want to own one again. But I am not the only person in my life. And so I’m in a car dilemma myself. I am completely ready to go car free – I bike and use transit and belong to zipcar. However my partner is not. He currently drives my 10yr old Saturn with 230k miles on it. (It’s the 2nd car I’ve owned in my life, the only new one. The other I drove till it literally fell apart.) However he’s not great at maintenance and the thing is probably on its last legs anyway. And of course I’m the one with the larger paycheck and savings account. What do I do when the Saturn dies? We can’t afford to buy a car outright; we could barely make payments on a loan. Do I go into debt (I so recently got out!) to help him buy a car? do I help with payments on a loan in his name (if he can get one)? do I hang him out to dry??? That just doesn’t seem right.
Sorry for the venting, and on my first post too! Guess this one just hit a sore spot with me… :)

What I would like to see along with the $475 average payment she mentions in the article is a figure on the average lenght of a car loan that payment amount is associated with. My payment will be about $40 higher than that, but It will allow me to pay it off in under 3 years and with only a little more than $500 interest payments total.

This was a fun article to read. I have been driving a 1993 Honda Civic since 1996. I love that car. Love it.
If it gets scratched – oh well! Over Christmas, my sister said, “You know, you are allowed to buy a new car.”
You don’t say.
But she doesn’t know. Every time I look at my Civic I think about the piles of cash that have gone into my 401k and Roth, learning to ski and going on ski trips, buying a house, and now funding a 529.
I’ve got bigger fish to fry, sis!

I got a very cheap new car. My payments are $140/mo and I got a great interest rate 3%. I am able to make extra payments to about pay it off. But I don’t understand why people complain about full-coverage insurance. If you have any assets at all, get the most insurance you can possible afford. Someone is going to crash into you and sue your butt for every dollar you are worth…

I’m firmly in the buying new frame of mind but I also keep them until they fall apart…or someone runs into me and totals it out. With that in mind my current new car was financed but for short term. After that I’ll be continuing to make a car payment to myself investing that money in some way until it actually is time for another car. At that point I’ll just go buy the car and see what kind of deal I can get for cash.

In addition I do as much of the work myself as I can to save me both time & bother getting to dealership and to save money.

I have a friend in Maine, Harvard Business School MBA, so he can analyze financial propositions. He buys only Volvos and Saabs with 85,000 miles or more on them and drives them until they have have 250,000 to 350,000 miles on them. It’s a cheap way to drive if you have the time to search out the right cars.

This post was awesome, great writing… I can’t believe people are criticizing it for the writing, it’s called POETIC LICENSE!

I was very lucky in that my dad bought me a new car when I graduated college (Note to parents: if you’re going to do that, give your child the car one year BEFORE they graduate, as they’ll need it for job interviews.)

My mom, dad, and sister have berated me for years for never replacing the car. They’re all new car people. They lease cars, or trade them in every few years. My car is 6 years old now and I still love it. I use it very little now since I can walk to campus, and I plan on driving it for at least another 4 years. It is a Subaru (they have a reputation for lasting a long time) and has never given me any major problems.

I love new cars. In fact, I have 4 V8 cars at the moment (in Australian terms worth over $800,000!). They don’t cost me a cent. That’s right… none of them do.

It’s now that you have a big car or a small car or an old car or a new car. It’s what meaning you assign to it and what you are willing to accept.

If it makes you feel great that you’re driving a bomb, fantastic! Nothing wrong with that. But if you feel like crap because you’re driving a bomb because that’s all you feel you can afford, may be that’s no OK?

For me, I love cars, I love fast cars, I love racing cars (on a circuit not street!) and I love the feeling you get when you drive around in my Ferrari. It makes me feel on top of the world. You don’t have to have a car… get a scooter – it’s cheaper than anything to run or buy! :)

So my point… long-winded at that… is don’t use the excuse “it’s expensive” to settle for something that makes you feel bad. If you are going to go for a “cheap” option, do it for the right reasons.

For example, I know a guy who is worth $200m+, and he bought himself a 1.3litre Daihatsu (sp?) two seater … in yellow mind you! for peanuts. That’s his day to day car. Most days. Other days it’s a couple of Bentley’s or something.

I used to be in the always buy used camp, because of the immediate depreciation when you drive a new car off the lot.

However, as Ben noted that’s not true for all cars anymore. The cars I’m looking at when my 17-year-old car finally kicks it are nowhere near 25% cheaper used. I’d say it’s more like 10% for 2-year-old cars vs new. So the lesson I would take out of the boyfriend’s example is not “Don’t buy new” but “Don’t buy a Dodge.” I’ve noticed other people mentioning that their brand new Civic is way better than the used Jeep or Ford Taurus, therefor new is better. I say that there’s a reason GM, Ford and Chrysler are losing money and in danger of going bankrupt: quality.

Both my cars have been old when I got them and REALLY old before I got rid of them, and they never had any major problems. The only time I’ve used my CAA membership was when my battery died. And coincidentally, both of them were good (Japanese) cars. A 15 year old Toyota doesn’t sparkle but it also isn’t a ‘beater’. A 15 year old Dodge will likely cost you more to keep running than it will to replace.

I also don’t understand people justifying taking out loans for new cars. If you can’t afford to pay cash, you can’t afford the car. Period. The only exception is when the loan interest rate is lower than your savings account rate. But otherwise, you’re living beyond your means and not following the precepts of get rich slowly. Most people need a car, nobody needs a brand new $30,000 truck. That’s a want, and you shouldn’t go into debt to satisfy your wants.

After an accident which ended the life of my old car (bought new, I’d had 9 years, it was like new and I planned to drive it 5-10 more years, I’m still a little despondent), I bought a used car in the same class (compact). Now, I’m looking ahead to when my fiance and I live together, and his annual mileage will be twice the average (we live an hour apart and neither wants to leave our job, so he will commute until we fix up our house to sell it and move to a more in-between locale). I’m considering selling the used car that I’ve had only a year, spending a little more, and getting a used hybrid with better gas mileage (which are not easy to find). The savings in fuel will help pay for the increased purchase price over a few years, but we have to decide if we have the time to do the selling/looking/buying.

Uhg, Of course a car topic.
I just bought a brand new 2008 Hyundai Elantra (for $13,000+tax,titile,lic of course) However, I had been driving my first car. My *beloved* 74′ dodge dart swinger, which now sits in the driveway due to a devastating accident. I’m a student living at home and I can afford the low payments which I got by having a huge down payment ready. However, I reluctantly bought this new car, and now everyday since I’m consumed with anger/rage at how I let myself be â€œconvincedâ€ into buying it.
I believe the determining factor here was the warranty included with all Hyundaiâ€™s.
I don’t know, to me nothing holds a candle to the feeling you get from driving a vintage car.
Nice to see all the comments here..

I bought my first car at 20 – I got my license at 19 and never had a need for a car (living in NYC – but then I moved to Buffalo for school). When I bought it, the car was in great condition and ran without any problems. I had it for about 4 years before I got that new car itch; I really wanted to drive that car into the ground, but gas started creeping up and the fillups were getting to me.

I looked around and decided on a 2004 Civic. I thought I got a great deal, until I drove the car. Turns out the brakes were bad. I drove the car from Buffalo to NYC and back and could have died; I decided then and there that I wanted a new car. I didn’t want the headache of worrying about a used car; I was really afraid of getting a used car (at least from the same dealer; in their 150 point inspection, they managed to miss the brake problems.

I currently have a 2008 Civic – I plan on paying it off in 3 years. Depreciation, whatev!

Many great replies. I would favor “buy new, buy reliable, and drive it until it crumbles,” with a strong preference on Honda, Subaru, and Toyota. There is a sidelong rationale that says if you own your own land and home, you should have at least one domestic truck from the ’80s or thereabouts, since they are low-tech and low-maintenance-complexity: if you have oil, water, and gas, and all the parts are intact, that sucker is running. That’s for everyone still pondering yesterday’s apocalypse posts. Don’t use the domestic truck as your daily driver… use your Civic. And don’t pay much for it. But when it all hits the fan, that’s the vehicle that will be worth its weight in gold.

Another issue is what to do when you’re climbing out of debt and paying cash for a car isn’t going to happen? I had this situation in 2003. I had zero income except student loans and law school on the horizon, plus debt and mediocre credit. I bit the bullet and bought a used 1999 Accord on a 60-month loan with some down. $284 a month, that car costed me. I tell you what, though. It has 185,000 miles on it, it still runs like it’s brand new, and I had enough cash to kill off the loan at the 4.5 year mark thanks to living “student cheaply” the whole while. That car had to last me through law school and it did. Now I take the commuter bus to work and the Accord costs me nearly nothing to keep and maintain, and there’s no telling how many more YEARS I’ll likely get out of it. My next new car will be for the wife and baby to drive, since her POS ’01 Mitz is falling apart. So to those in a “rebuilding” mode, I would suggest just clenching your teeth and holding your nose and paying what you have to pay in order to get yourself into a RELIABLE Honda, Subaru, or Toyota, and then grind your way through that loan as cleanly as you can, missing no payments, even if you don’t get to pay it down early.

I think the new vs. used car question is much more complicated than has really been touched on here.

I bought my first new car 7 years ago and have put 126k miles on it. It’s been very reliable, with repairs only in the last two years and lots of original parts still on it. But I’m not easy on cars and I admit it. I plan to drive my little red wagon until I am out of debt at least. I paid $18k, paid it off in 5 years and while I still carry full insurance coverage, it’s only about $800/year.

On the other hand, I have a co-worker who thinks that what she drives is a major reflection on herself so she wants luxury cars. She bought a used Lexus. It started falling apart and she decided she wanted an Infiniti instead so she tried to trade in the Lexus. That’s when she found out the Lexus had frame damage from a side impact prior to her purchase and she couldn’t get a decent trade-in. She finally did trade it for the Infiniti. She told me what she found. She told me the price. She told me how long it had been sitting on the lot. I told her she was paying too much for it.

Well, a year later, the Infiniti develops a mysterious engine noise that no one can diagnose and she finally gives it up… For a new Corolla. Her dad helped her buy the Toyota because obviously he has more sense. She’s miserable.

Shop around for the best deal on interest if you can’t pay cash. Pay extra to pay it off sooner. Shop around for insurance too and keep in mind what coverages you really need. I work in auto insurance claims and I can’t tell you how many people complain that their deductible is too high, they can’t afford it, and that they don’t have rental reimbursement or a second car to drive while theirs is being repaired. Rental coverage is really cheap, FYI. Lower your comprehensive deductible if you can’t lower your collision deductible (comp is much cheaper and it’s unlikely you’ll ever get that money back due to the nature of comp vs. collision claims so only choose a comp deductible you can really afford). Also, despite what the people who will try to sell you insurance may say, if your car is 10 years old, you still have to ask yourself what will happen if your car is totaled and you don’t have coverage on it? Would it be a major financial hardship.

Anyhow, sorry, off topic a little. I could go on and on about auto insurance because it’s what I do. Not selling it, but dealing with the aftermath of people’s insurance choices. And that’s the stuff that the salespeople don’t know diddly about.

I love cars, but they are a thorn in my side. I would argue just the opposite of Web.Serf. If a particular model has flooded the market, the price will be artificially low, making it a better deal! I wouldn’t buy a former rental car, but the same make and model will carry the same lousy depreciation for the original owner – thank you for taking the hit original owner. I say the greater the original depreciation, the better for me.

Buying securities that the market undervalues is called “value” investing. Buying a highly valued car only makes sense if you will buy new.

Robin @85 comments about insurance and deductibles – JD, how about a column detailing that sort of thing? That whole topic is confusing. I think I’ve got good insurance, but I’m not really sure. I’ve got uninsured and underinsured coverage – what’s the diff? (This one I actually know) When I got hit by an uninsured motorist (totally their fault), I found out that I had to pay the deductible, the insurance company paid the rest and went after her for that money. If she ever made full payment (which she didn’t), then I would get my deductible back, but only after the insurance folks got all their money first. I didn’t know that. We pay a lot of money for insurance. Maybe an exploration of how to get the best value for that money would be worthwhile?

Very good comments from all! One thing I want to mention to all the people that say “buy new and drive it til it breaks” is that if your car gets totalled in a collision, you essentially have to “sell” the car at market rate. In other words, if your $25,000 car is worth $15,000 after 3 years, and it gets totalled, insurance will only give you $15k and you’ve taken a $10,000 hit on depreciation. My used $7000 car after three years is worth $5200 — I can write off $1800 or $600/year as just the cost of owning a car.

I know that if you’re involved in a collision that you have other things to worry about (your health), but I just wanted to throw this out as something to consider when choosing new vs. used.

” A 15 year old Toyota doesnâ€™t sparkle but it also isnâ€™t a â€˜beaterâ€™. A 15 year old Dodge will likely cost you more to keep running than it will to replace.”

I don’t necessarily buy that, I have had foreign cars that break to, and they can be VERY expensive to fix, and the parts are not always readily available. Some mecanics won’t even work on them, ( I don’t know why because 50% of the vehicles on the road are foreign so you would think that they would learn how to work on them)!

My 15 year old Dodge (Eagle Vision) had 307,000 plus miles on it and has been anything but troublesome. No major repairs and after that many miles I would surely have to expect some, however I am looking at probably having to replace it at some point!

I own a 1984 Oldsmobile station wagon, purchased for $2500 five years ago. It was a retired couple’s second car and in immaculate condition with low miles when I got it. It’s bad on gas, but the fixed costs are next to nothing. It’s a fairly reliable model and was in good shape when I got it. It has had to have a few repairs, but nothing too expensive. (Worst repair was $565 to replace the air conditioning compressor and rebuild the system.) It’s a twin of the ultra common Chevy Caprice, built in an era before widespread electronics, so parts are plentiful and cheap.

Cars like this can be found, but it takes work to research them find them. It helps that I know a little about keeping them running. Nothing will save you more money than learning a little bit about basic auto repair.

I have a passion for sports cars and it happened that there was a sports car rental company in my building. So I did a JV with them where they rent out my cars and they actually make me more than I pay for them. Instead of liabilities, they become assets that depreciate in value but generate a return of around 110% COC.

You can check out my website for some more details. I’m not trying to spam here, just easier than typing the whole story out.

I’ve owned one new car, and I don’t think I’ll buy new again. Worrying about every shopping cart and moron sideswiping me took all the joy out of it. I’d rather buy something already dinged up and not feel like I have to park out in the BFE area of the parking lot.

^ agree w/Michelle. The parking lot at my employer’s is notorious for door dings. I like driving beaters so that I don’t care about getting (or dishing out) the dings.

Jap cars don’t work for me because they were designed for Jap sized people. I’m a big ol’ American, way beyond Jap size.

I like mushy-suspension geezer sedans, and it’s a weird taste I know, but it’s the best kind of car to buy used, grandpa’s low-mileage cream puff with well kept maintenance records. There’s great cars like this in the used market.

The only new car I ever bought was lemony, and all my used cars have been super reliable no problems, and came with complete care/maintenance records and a thorough inspection by a quality mechanic. I paid at or below market value for them. No smoke odors either.

I am an auto idiot, can’t fix a thing (do well to operate the radio and heat-AC LOL) but I don’t mind spending a little money on maintenance and repairs. Cheaper than a car payment.

I would rather accumulate wealth and achieve financial independence sooner, than drive new cars all through my life. That’s the trade-off.

Robin should do a guest post on auto insurance! Seems like there’s little reliable info out there on how it really works.

Liked the original post…clever metaphor. Sort of like why men marry brunettes. LOL

“What’s not to love about a new car” came at me directly from the text of this post, and it could be found in the phrase “$1000 per month.” That is more than my mortgage! Insurance is expensive, sure, and so is gas, but anything that would lead me to spend that much of my money in one place – on something that isn’t a necessity – isn’t my friend.
Jerryhttp://www.leads4insurance.com

We have been prepaying our used precertified Honda van off early and are mailing the last payment today. I see a message on the bill:

“Your financing contract is about to end. And a lot has happened since you first bought your Honda. We’ve introduced some great new cars and trucks to the lineup, and now would be the perfect time for you to check them out. So stop by your Honda dealer and see what’s new.”
Lol. Maybe that works for some people. For me New car: 20 grand. Not having a car payment: priceless.

To Dan and Phil- Lots of people don’t know the difference between uninsured and underinsured motorist coverage (I have to explain the difference to personal injury attorneys regularly, go figure).

Powderpuff is right about gap insurance. It pays the difference between what your car is worth and what you owe on it. Owing more than your car is worth is frequently called being ‘upside down’ on your loan and is common within the first 2-3 years of a new car loan. You must pay off the remainder of the loan to your bank (usually within a short time, like 30 days) with no vehicle to show for it even if you don’t have gap insurance.

As to getting paid back after your insurance company takes their money- you need a new insurance carrier. The one I work for always pays back our policyholders first. Also, state regulations vary on waiving or reducing deductibles in the case of UM (uninsured) drivers. Here in CA you can select a deductible waiver option but state regs require the at fault party be identified and verified UM. I can’t recall OR regs off hand (I know JD’s in OR), but WA allows the deductible to be reduced but not waived.

Asking questions of your carrier is good, but not if you don’t know what questions to ask. Also, sales and service people in insurance probably don’t know the answers. Not their fault, they aren’t trained in the details of when coverage does or doesn’t apply. For example, if you ask them if you are covered when driving a rental vehicle or a friend’s vehicle they will likely say yes. In reality, the answer is- Maybe or It depends.

In fact, insurance is so complex that no one knows all of the answers to every situation and courts are constantly making decisions that change it.

I agree though, that a financial blog doing a piece on insurance is a very good idea.

As an aside, I told that story about my co-worker just to point out that my new car has probably cost me less than her cars in the same time period. Things could just as easily have been reversed if my car was less reliable or she’d had someone who knows cars inspect her used ones before buying them, therefore new vs used being a complicated equation.

After many years of cash poverty for school and training, I’m actually making a little money this year. I’m still living like a student, so I have cash available. I want to spend my new money on things, and this site has helped a lot when it comes to setting priorities.

One thing I want is a new car. My current car is an ’01 Accord, purchased in ’03 through Honda’s Certified Pre-owned program. At purchase I saved about a third of the cost of a comparable new Accord.

My experience is that even Accords need a lot of stuff replaced between about 100k to 120k mi, and that this is a time when I get tired of squeaks and maintenance costs. Does anyone else find this? Do you people who drive your cars 150k mi or more find that you get through this phase and go back to scheduled repairs only? Do you ignore squeaks? Saving a third of the purchase price but getting a car with 30k mi on it isn’t worth much if I’m going to drive the car to 110k mi and sell.

For my last car purchase, getting a pre-owned Accord rather than a new one meant I could pay cash, and I’ve gotten the benefit of a good warranty all along. But if I could have paid cash for a new Accord then I would have gotten all the options I wanted, and I wouldn’t be buying a new car now. Maybe. Honda has made the Accords a whole lot spiffier, so I’d still be tempted. But I wouldn’t have as much justification. :-)

(BTW, my experience with the Honda Certified program has been GREAT. Their service department detected that my transmission was slipping before I did. They covered a free new transmission – it would have cost me $3500 to replace – and gave me a free loaner Accord while it was fixed. The whole experience was completely smooth and pain-free.)

After three Accords my heart wants a Miata (no MINI’s for me!) and I can probably pay cash for a new one by the time car-buying season rolls around in the fall. It’ll be hard to say no, and there aren’t a lot of used recent-model Miatas on the market, and Mazda’s pre-owned program isn’t as good as Honda’s. It seems silly to ask for thoughts on the financial wisdom of buying a new Miata :-), but does anyone have any thoughts??

If I were to get a certified pre-owned convertible I’d get a Lexus (which has a good pre-owned program). But that would mean spending more money up front I could otherwise invest, and a car is not an investment.

And on another subject, any thoughts on how much I should spend to fix the squeaks and burned-out dashboard light and big dent in the hood of my current, completely reliable Accord?

Well I have not had the privilidge of owning a new car. I did once purchace a car that was a lease return and it did not have the new car smell anymore…it was 6 months old. my not so new truck is 2 years old. Also the benefit to me was that I have never had a car payment. My 2nd car (which I still own is a 94′ celica with 188K miles. still runs great but I am nervous driving it. I have in the past drove it from florida to california twice, and numerous times from san diego to las vegas.

Your email address will not be published. Required fields are marked *

Comment

Name *

Email *

Website

My name is J.D. Roth. I started Get Rich Slowly in 2006 to document my personal journey as I dug out of debt. Then I shared while I learned to save and invest. Twelve years later, I've managed to reach early retirement! I'm here to help you master your money — and your life. No scams. No gimmicks. Just smart money advice to help you get rich slowly. Read more.

If you like this website, you should check out the year-long Get Rich Slowly course. It contains everything I've learned about saving and investing during 12 years of writing about money. Buy it here.

General Disclaimer: Get Rich Slowly is an independent website managed by J.D. Roth, who is not a trained financial expert. His knowledge comes from the school of hard knocks. He does his best to provide accurate, useful info, but makes no guarantee that all readers will achieve the same level of success. If you have questions, consult a trained professional.

Advertising Disclosure: Some offers on this page may promote affiliates, which means GRS earns a commission if you purchase products or services through the links provided. All opinions expressed here are the author's and not of any other entity. The content at Get Rich Slowly has not been reviewed, approved, or endorsed by any entity mentioned at the site. For additional information, please review our full advertising disclosure.